BUSINESS process outsourcing (BPO) firm Transcom Worldwide AB is expanding its operations in the provinces, amid the moratorium on new economic zones in Metro Manila.
“The fact that new PEZA (Philippine Economic Zone Authority) registrations are no longer available in Metro Manila, that now changes the landscape. We were not aware of that last year when we were starting to look at new sites but clearly with that being the case and PEZA real estate being at a premium, then moving forward we will be outside of Metro Manila,” Mark Lyndsell, Transcom CEO for Global English Region, told reporters at the launch of the company’s new Pasig site on Tuesday.
President Rodrigo R. Duterte signed Administrative Order No. 18 last June, banning new economic zones in Metro Manila to encourage the development of special ecozones in the countryside.
The Information Technology and Business Process Association of the Philippines (IBPAP) noted last month that the BPO industry could lose 50,000 job opportunities because of the moratorium on new ecozones in Metro Manila.
BPO companies prefer setting up shop in PEZA-accredited office buildings in order to avail of incentives. The BPO industry accounts for 30% to 35% of the total office space take-up in Metro Manila. More than half or 56.17% of the 381 PEZA-registered IT economic zones nationwide are in Metro Manila.
Transcom, which has offices in Bacolod and Iloilo, had been considering adding more sites outside Metro Manila even before the moratorium. The company is currently looking at areas just south of Metro Manila, and is prioritizing safety, ease of access, and transport links in selecting new locations.
The company is also concerned about the transition timeline of changes in fiscal incentives proposed in the Comprehensive Income Tax and Incentive Rationalization Act (CITIRA) bill.
“Most of the contracts we have with our clients are typically three-year contracts, so anything that happens to the incentive program which is immediate could have a detrimental impact in our business,” Mr. Lyndsell said.
The CITIRA bill would allow firms who already avail of income tax holidays to do so for three more years, and caps additional incentives at five years. They can also pay the five percent tax on gross income earned in lieu of national and local taxes for two to five more years.
Mr. Lyndsell agrees with the two to five-year transition period being proposed, and said that immediate changes in the incentive program would mean that they would “review the situation.”
“It is a very competitive landscape. There’s emerging markets all ‘round, different countries in Southeast Asia are now providing significant incentives. But that said, [the] Philippines does provide a unique solution to many of our clients so we’re hoping there will be a sensible solution moving forward,” he said.
Amid the challenges, Transcom aims to retain its nearly 12,000-employee headcount.
“It’s a challenging environment for our industry so our expectation is to maintain our headcount level into 2020 and to see the business grow next year,” Mr. Lyndsell said.
Operating in 20 countries, a third of Transcom’s operations are done in its five Philippine locations. Transcom provides customer care, sales, technical support, and credit management services.
Transcom’s new office at The 30th Corporate Center in Pasig City can accommodate up to 1,000 employees. — Jenina P. Ibañez